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Ex-Enron leaders' fate now in jurors' hands

By ASSOCIATED PRESS
Published May 18, 2006

HOUSTON - The question of whether Enron Corp. founder Kenneth Lay and former chief executive Jeffrey Skilling are crooks and liars in what a prosecutor deemed a "historic case" was left in the hands of a jury Wednesday.

The panel of eight women and four men in the blockbuster fraud and conspiracy trial began deliberations with one last plea from a prosecutor to hold the defendants accountable for obfuscating the company's financial problems in a web of lies as the government alleges:

"I'm asking you to send a message that it's not all right. You can't buy justice. You have to earn it," Sean Berkowitz, director of the Justice Department's Enron Task Force, told jurors before they retired to a secluded room to reach a verdict.

The trial is the premier criminal case to emerge from the government's 4½-year investigation into Enron's 2001 collapse amid one of the most sweeping corporate scandals in U.S. history. More than $60-billion in market value, almost $2.1-billion in pension plans and 5,600 jobs were lost in its fall.

Skilling faces 28 counts of fraud, conspiracy, insider trading and lying to auditors, while Lay faces six counts of fraud and conspiracy. Both face lengthy prison terms if convicted on all counts.

Lay, 64, and Skilling, 52, once enjoyed reputations as business visionaries who led the transformation of a once-staid natural gas pipeline company into an energy giant that peaked as the nation's seventh-largest company with $100-billion in reported revenue.

The government alleges they were so bent on maintaining Wall Street's adoration that they lied repeatedly about Enron's financial health when they knew accounting schemes inflated profit and hid hundreds of millions of dollars in debt and bad news.

By the fall of 2001, the alleged chicanery was crumbling, pushing Enron into bankruptcy proceedings by December.

The government, through its 25 witnesses, sought to tie Lay and Skilling to an overarching conspiracy to lie to employees and investors.

Berkowitz said neither defendant tried to ruin the company. But the fraud could survive only as long as Enron's stock price was up and "if they could just hold on, they felt if they could just lie a little longer and get to the next quarter and the next quarter, everything will be fine."

As the share price fell throughout 2001, inner financial rot came to light.

Skilling, who abruptly resigned from Enron more than three months before the company failed, and Lay each spent more than a week on the witness stand proclaiming their innocence. They were the stars of the 29 defense witnesses, assailing the government for fabricating crimes in a mission to make someone pay for the suffering of employees and investors.

The defense teams also said prosecutors, unable to dig up tangible evidence of guilt, pressured ex-Enron executives through the threat of prosecution to plead guilty to crimes they didn't commit.

Berkowitz dismissed that notion Wednesday. He said those who admitted to crimes did so because they conspired to cook Enron's books and broke the law alongside Lay and Skilling.

Skilling faces 10 counts of insider trading, and attributed his Sept. 17, 2001, sale of 500,000 shares of Enron stock to market fears in the aftermath of the Sept. 11 terrorist attacks. But he tried to sell 200,000 stock sales the week before the attacks and testified he forgot that order even though jurors heard an audiotape of him placing it with his broker.

Jurors wrapped up their first half-day of deliberations Wednesday afternoon after about 2½ hours. They were to resume at 8 a.m. today.

The jury also decided it would deliberate from 8 a.m. to 4 p.m. Monday through Thursday, until it reaches a verdict, the defense lawyers said.

[Last modified May 18, 2006, 07:56:17]